Nearly 30 serving directors of NSE-listed companies will be affected by a new rule that sets a 70-year age limit for board members of publicly traded firms.
About 27 directors of Nairobi Securities Exchange (NSE) traded firms — including board chairmen — are aged 70 and above.
While company shareholders at the annual general meetings (AGMs) could previously vote to extend the tenure of directors aged above 70, such firms will now be required to offer detailed explanation to the regulator as to why they must retain such board members.
The regulation is part of the newly gazetted Capital Markets Authority’s (CMA) corporate governance code which takes effect immediately.
The rule means that companies whose board members are past the upper age limit now have to seek fresh shareholder approval at their next AGMs to continue serving.
“There shall be an age limit for the members of the board … board members to retire at the age of 70 years,” said CMA acting CEO Paul Muthaura in a notice published in the Kenya Gazette.
“Where decision-making produces a lower standard than that which is prescribed in the code, listed companies will be required to explain non-application of the recommended standards to shareholders and the authority through relevant channels such as annual reports and annual general meetings,” said acting CMA chief executive Paul Muthaura in a statement last week explaining the new code.
Regulator’s move to cap the age of board members is meant to strike a balance between having long-serving, experienced directors and the need to inject fresh blood and ideas into the listed companies.
James Maina Wanjigi, 84, chairman of Carbacid Investments, is possibly the oldest board member among NSE-listed firms. He has been a director at the industrial gas producer since 1970.
Robert Shepherd, 83, also serves as a board member at Carbacid. Mr Shepherd first joined the gas maker in 1967 as managing director and retired in 2001 but has continued to serve as a non-executive director.
Ameer Kassim-Lakha, aged 81, serves as a director of TPS Serena.
In electing directors, CMA has advised shareholders to elect “credible persons who can add value to the company’s business” rather than maintaining the revolving door of the old boys’ club.
Solomon Karanja, 78, serves as a director at Bamburi Cement.
Jack Jacob Kisa (TPS Serena) and Michael Somen of NIC Bank are all aged 77.
The list of directors serving at NSE-listed companies hit by the CMA age limit also includes Safaricom chairman Nicholas Ng’ang’a, NIC Bank director Frederick Mbiru and Carbacid board member Baloobhai Patel – all aged 76.
The CMA, in setting age limits for directors, is borrowing best practices from other regulators. For example, the Companies Commission of Malaysia sets 70 as the age limit to serve in a public firm.
“Age limits are the most prevalent mechanism triggering board turnover, and they continue to rise,” says a study by Deloitte.
Very few boards have directors aged 40 or younger, says Deloitte in the study dubbed ‘The 2014 Board Practices Report: Perspectives from the Boardroom’, highlighting the global trend of having senior citizens in company boards.
Other directors affected by the age-limit rule include I&M Holdings’ Michael Karanja, 75, and Centum’s Chris Kirubi, 72.
John Simba, Pan Africa Insurance chairman and director at Olympia Capital, Gayling Richard May who is non-executive director at CfC Stanbic, Liberty Kenya and BAT Kenya as well as Centum chairman James Muguiyi are all aged 71.